OIL FUTURES:Crude Settles +3.7% As Equities Rise

Crude oil futures prices rose 3.7% Tuesday, led by a rebound in U.S. equities prices.

Light, sweet crude oil for September delivery on the New York Mercantile Exchange settled $2.44 higher at $69.19 a barrel. The rise was the biggest since July 31. ICE North Sea Brent crude oil for October delivery settled up 2.6%, or $1.83, at $72.37 a barrel.

The recovery in share prices provided the spark for the turnaround in crude, which had fallen 5.3% over the previous two days to its lowest settlement since July 29.

"The two-day downswing resulted in some oversold conditions and risk-taking is coming back in the market in the form of higher commodity and equity prices," said Adam Klopfenstein, senior market strategist at Lind-Waldock.

September crude, which expires at Thursday's settlement, traded to a high of $69.58 a barrel, coming just short of settling above its 10-day moving average, which would be a clear technical sign pointing to still further gains.

"Closes above the 10-day moving average crossing at $69.75 are needed to confirm that a short-term top has been posted," said Tony Rosado, a broker at GA Global Markets.

The October contract, which will become the spot contract Friday, is attracting more trading volume, and settled at $71.09 a barrel, up 3.3%, or $2.28.

Following Tuesday's settlement, the American Petroleum Institute reported a surprise steep 6.134 million-barrel drop in crude oil stocks, while a rise was expected. September crude jumped 89 cents from the settlement, to $70.08 a barrel, the highest intra-day level since Friday.

The API also said gasoline stocks fell 847,000 barrels and distillate stocks rose by 1.529 million barrels. Refiners lifted operations relative to capacity by 0.9 percentage point, the API said.

The market will look for confirmation of the API data when the Energy Department's Energy Information Administration releases its weekly data at 10:30 a.m. EDT on Wednesday.

With September crude near its expiry, October crude challenge resistsance near $72.25 a barrel if the EIA confirms the decline in crude, Rosado said.

Analysts surveyed by Dow Jones Newswires expect that data for the week ended Aug. 14 will show crude stocks rose by 1.5 million barrels, amid a slim 0.2 percentage-point rise in refinery operations relative to capacity. Gasoline stocks are expected to show a drop of 800,000 barrels, while distillate stocks (heating oil/diesel) are expected to rise by 500,000 barrels.

September RBOB gasoline futures traded to a high of $2.0150 a gallon, and settled at $2.0002 a gallon, up 4.87 cents, or 2.5%, the biggest single-day gain since Aug. 3 and its highest level since Aug. 12. The contract ended just below its 10-day moving average of $2.0076 a gallon, which would have confirmed that a near-term floor had been put in place, Rosado said. link......?